Gotham_ A History of New York City to 1898 - Edwin G. Burrows [724]
Like any other European-based concern, J. S. Morgan and Company needed reliable information about the great American West. Junius turned to his son, Pierpont, whom he had long been grooming for the business. After being schooled in Switzerland and Gottingen, Pierpont had started work in a conservative Wall Street firm during the panic year of 1857. Brilliant but rash, the burly young man with the handlebar mustache and intense gaze alarmed his employers, and when they refused to make him a partner Morgan formed his own firm in 1861.
Pierpont composed lengthy letters to his father on America’s political and financial condition (and reported in person to London each spring), but he also found time to participate in the speculative scramble of the war years. (When drafted, he’d purchased a substitute, whom he jocularly referred to as “the other Pierpont Morgan.”) He became a regular denizen of the Gold Room, cleared $160,000 on a market-rigging scam, and financed some speculators who purchased five thousand obsolete rifles from a government armory in New York and resold them to government troops in Missouri at six times the price. Junius, dismayed, orchestrated an alliance with a sober banker thirty years Pierpont’s senior, and Dabney, Morgan, and Company became his New York agent.
As his father moved into railroad financing, Pierpont set out to investigate the frontier first hand. Boarding a train in July 1869—a scant few weeks after the first transcontinental line had gone into operation—he and his new wife, Fanny (daughter of the successful lawyer Charles Tracy), headed for the Far West. After a twelve-day stopover in Chicago, during which he met with officials of the major railroads, he pressed on through Nebraska in one of George Pullman’s recently invented luxury sleeping cars. From his window he spotted Pawnee warriors, wagon trains, and U.S. Cavalry scouts. Then the train notched through the Rockies at South Pass and descended into California, where Morgan spent an additional month, as the guest of prominent Western businessmen, deepening his firsthand knowledge of the emerging American rail system.
In 1871, when Dabney retired, Junius arranged for a new Pierpont partner: Anthony Drexel, a leading Philadelphia banker, who was well aware that the center of financial activities lay in New York City. Two years later, the firm of Drexel, Morgan, and Company moved to a brand-new six-story marbled building on the corner of Wall and Broad streets (the land alone had cost a record-breaking $349 per square foot). The new company, in alliance with Morgan Senior, was perfectly positioned to market railroad and government bonds to English clients and swiftly became one of the leading houses on Wall Street.
England was not the only source of investment capital flowing into New York City. Germany too shipped vast quantities to Wall Street, and this afforded an opening for several German Jewish concerns that had made the transition from commerce to banking. The most influential was the firm of J. and W. Seligman. Joseph Seligman and his brothers, having done well in California commerce, had moved into banking by trading their West Coast bullion on the New York gold market in the 1850s. They quit just in time to keep their fortune from being wiped out by the 1857 panic and bought a clothing factory just in time to take advantage of wartime government contracts. When, to their dismay, they were paid with Union bonds instead of specie, they learned how to convert the paper into hard cash by selling the securities to wealthy contacts in Frankfurt and Amsterdam.
The Seligmans’ expertise caught the eye of the secretary of the treasury, who enlisted their aid in marketing tens of millions of new government notes abroad. It proved much easier to raise money among Germany’s numerous Union sympathizers than in the City of London, whose cotton connections left it cool to the North. When the war was over, the brothers established